National Pension System (NPS) is a popular investment plan for building a retirement corpus. Based on the preferences, individuals can invest in four NPS asset classes – Equity, Corporate Bonds, Government Bonds and Alternate Assets.
NPS is a secured option of investment regulated by PFRDA (Pension fund regulator under Govt. of India). It is an investment that can be availed online and is preferred among those individuals who are risk-averse and utilize tax benefits under Section 80C deductions.
There are two types of NPS accounts:- Tier-I and Tier-1
Tier I is a mandatory retirement account that allows NPS subscribers to avail tax benefits but does not allow to withdrawal entire money till retirement.
Tier II is a voluntary account of NPS subscribers to invest and withdraw anytime if withdrawal terms and conditions are met. More importantly, investors can invest in a Tier II account only if he has an active Tier I account.
How does it work?
Employed individuals contributing to NPS would enjoy tax benefits on their own contributions as well as their employer’s contribution as under:
(a) Employee’s contribution - Eligible for tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1 lakh under Section 80 CCE.
(b) Employer’s contribution – The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed by the employer under Section 80 CCC(2) over and above the limit of Rs. 1 lakh provided under Section 80 CCE.
How can you invest in NPS?
You can access NPS Online platform from TT Web >> Market >> NPS Online
Once you click on NPS Online, the following page would be displayed.
Please note that the user details have been hidden in the above screenshot for a data privacy perspective.
You can view and confirm the details displayed. On confirmation, you would be redirected to the NPS registration flow.
If you are a first time user, you will be asked to complete registration as per the below process -
On continuing, you would have to enter the following details -
- Personal Details
- Contact & Bank Details
- NPS Scheme Details
- Nominee Details
- Upload Details (Cancelled Cheque / Signature / Photo)
- FATCA Details
Once these details are entered, you can complete the payment.
Options available for payment-
- Credit Card
- Debit Card
- Internet Banking
On completion of payment, you will receive an intimation from Karvy with respect to your investments.
Points to note:
You should refer to intimations from Karvy with respect to their login information, transaction status, etc. Once the investment is done, you can access the Karvy dashboard through the same link from TT Web. This dashboard can be used to review investments as well as to make additional investments.
What are the withdrawal terms?
a) An NPS subscriber at the age of 60 years is eligible to withdraw up to 60% of accumulation as a lump sum and rest 40% will be converted into a pension.
b) An NPS subscriber looking for an early exit before 60 years of age, then he/she is eligible to withdraw only 20% accumulated amount and rest 80% is a pension product to buy.
c) Lastly, in case of the death of any NPS subscriber, the nominee is allowed to withdraw 100% of NPS.
NPS scheme is thus a beneficial option for those looking to invest in equity exposure. Invest now before it's too late!